AT&T/T-Mobile Merger Jobs Outlook Scrutinized by Detractors, Touted by Others

The Telecommunications Law Resource Center is the most comprehensive reference and news platform for communications law, covering broadcasting, cable, broadband, telephony and wireless;...

By Paul Barbagallo  

The Communications Workers of America and opponents of AT&T Inc.'s proposed $39 billion acquisition of T-Mobile USA Inc.—including Sprint Nextel Corp., the Rural Cellular Association, and Public Knowledge—continue to spar over how many jobs would be created, or lost, as a result of the merger.

The CWA, an early supporter of AT&T's takeover of T-Mobile, released an analysis Nov. 8 projecting up to 96,000 new jobs if the deal goes through. The analysis draws on a study by the Economic Policy Institute that found that for every $1 billion spent on wireless infrastructure, AT&T would add up to 12,000 new jobs a year. The company has pledged to spend $8 billion over seven years to build out infrastructure necessary to make available 4G (fourth-generation) LTE (long-term evolution) mobile broadband service to 97.3 percent of the country.

According to CWA and EPI estimates, AT&T's $8 billion planned investment will create between 54,834 and 95,959 jobs over the next seven years. Some jobs will be in network construction, other jobs in supplier companies.

AT&T has put that number at 96,000, in addition to agreeing to move 5,000 call center jobs back to the United States if the FCC approves the deal. As for current workforce levels, AT&T has said it will maintain jobs for U.S.-based wireless call center employees of T-Mobile and AT&T who are on the payroll when the merger closes.

“T-Mobile is on a downward path both in terms of capital expenditures and employment,” CWA said in the analysis, titled “The AT&T/T-Mobile Merger and Jobs: The Real Story.”

“Not only is T-Mobile starved for capital and spectrum but it is losing customers, revenue and profits. In response, T-Mobile has already started cutting back investment and eliminating jobs. The downward spiral for a stand-alone T-Mobile is expected to continue if the merger falls through,” it said.

The CWA has supported the proposed merger because non-union T-Mobile employees would become unionized AT&T employees. AT&T is a union shop; T-Mobile is not.

In its new analysis, CWA tried to refute the claims of David Neumark, professor of economics and director of the Center for Economics and Public Policy at UC Irvine, who scrutinized AT&T's jobs commitment in a paper commissioned by Sprint Nextel Corp.ark appeared on Capitol Hill Nov. 8 with other merger opponents, including representatives from Public Knowledge and the Rural Cellular Association, to highlight his paper, “The AT&T/T-Mobile Merger: A Recipe for Reducing Jobs for American Workers.” Neumark said the CWA and EPI analyses are “completely unfounded.”

“The analysis rests solely on a claim in an AT&T press release that ‘The acquisition will increase AT&T's infrastructure investment in the U.S. by more than $8 billion over seven years.' Yet the analysis ignores foregone capital investment by T-Mobile, as well as the likelihood—attested to by AT&T executives—that the merger would allow for reduced capital expenditures,” according to Neumark. “Thus, whether by design or by mistake, EPI makes the fundamental error of failing to distinguish between gross and net investment. There may be some new investment generated by the merger, and this may be reflected in the $8 billion figure that AT&T cites in its press release. But that is just a gross figure.”

AT&T is currently facing antitrust lawsuits from the Department of Justice and two rivals, Sprint Nextel Corp. and C Spire, and continues to discuss the possibility of a settlement with the DOJ.

For CWA's analysis, visit http://files.cwa-union.org/tmobile/20111107_ATTTmo_Real_Story.pdf. For Neumark's paper, visit http://newsroom.sprint.com/images/9004/ATT-T-Mobile-merger-jobs-study.pdf.